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CONCLUSION
Project Khokha 2 journey
PK2 sets out to highlight implications of tokenisation in financial markets driven by DLT innovation. Consideration was given to both
the tokenisation of existing assets on DLT as
well as issuing new assets as DLT-based tokens. Tokenisation was explored through a PoC of
the issuance, clearance and settlement SARB- debenture tokens on DLT using a wCBDC for payment in the primary market and a wToken for payment in the secondary market.
The project team was tasked to not just replicate existing processes on DLT, but to design for DLT and re-imagine existing processes in the light
of decentralised and modular design principles. The PoC implemented two DLT platforms in a debenture token market, that is, the wCBDC Zone and Khokha Hub. This proved that it was possible to move away from the current centralised financial market architecture to a composable financial market where different financial role players, roles, infrastructures and assets can be built into TTPs in new and innovative ways.
Insights gained along the way
The wCBDC was implemented as central bank money, comparable and equivalent in value and quality to settlement accounts with the central bank. Issuing a token-based wCBDC on DLT created a riskless settlement asset on a platform which also serves as a payment settlement system as well as hosting settlement participants’ account, as a wallet on the DLT, with the central bank. It has been established that it is feasible
to port – export and import – the wCBDC to other (non-native) DLT-based platforms while maintaining a link back to its own (native) DLT. The wCBDC served as a corner stone to other components on the debenture token market, enabling trade on the market. The Khokha
Hub was built as a TTP with its building blocks consisting of a TPP, CSD, SSS and, through porting the wCBDC, elements of the payment settlement system. The modular design of the Khokha Hub enabled the creation of further tokens such as the FDM Token as a synthetic instrument to enable trading of debentures in
the secondary market. Both the porting of the wCBDC and the FDM Tokens proved that it was possible to port central bank value to other networks, which would require serious reflection on how to balance the benefits of interoperability between enabling innovation and managing access to central bank assets, in line with policy objectives. Participants have observed that the true benefit and challenge from DLT may not stem from the technology itself, but from the business process innovation it enables. Based
on the PoC, although the number of operators could potentially be reduced, the roles and functions did not disappear and therefore existing regulatory frameworks would still apply. The design of the PoC did, however, result in
the issuance of DLT-based tokens which are not defined in law and modular design of TTPs and would require further consideration to determine whether and how frameworks may need to
be updated. Further work is required to gain deeper technical insights and contribute to the development of informed technology responses.
CONCLUSION
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